Will Cable's plan stop fat cats being rewarded for failure? No

VINCE CABLE, the Business Secretary, has outlined a strategy to curb excessive boardroom pay, including giving shareholders the power to veto big bonuses and requiring companies to justify high salaries in their remuneration reports. Some commentators are critical of what they see as government interference in free enterprise, while others believe the reforms do not go far enough.

Shareholders unlikely to act

Cable has done his best to balance two objectives that are almost mutually exclusive, says Brian Groom, in The Financial Times, resolving the political problem over rising executive pay without damaging wealth creation. He passed the buck to shareholders, by offering to give them the binding vote on pay policy, while avoiding the proposal that worried many companies - that of putting employee representatives on the remuneration committee.
 
But shareholders may be reluctant to vote down pay rises, adds Groom, lest they be seen as showing no confidence in management. Meanwhile, the main factors that have boosted executive pay, such as the globalisation of the largest companies, "seem unlikely to go away".
 
Give Vince a chance

The Daily Mail says in an editorial that it understands why right-wing Tories dismissed Cable's plans for curbing excessive executive pay as "Liberal clap-trap" and "drivel". Some of Cable's proposals, such as promoting more women directors and consulting workers over boardroom pay, "amount to little more than politically correct posturing".
 
But the Mail acknowledges that something needs to be done to reform "a system that offers lavish rewards for failure". Cable's reforms may not work, "but they deserve to be given a chance".
 
Not government's business

Making executive pay the business of the government sets a dangerous precedent, says an editorial in The Daily Telegraph. At a time of financial crisis, there is understandable antipathy toward those earning more than most. But such executives are often running global businesses and are paid according to a global rate.
 
The real issue is not pay per se, "but the fact that it can be awarded despite poor performance", says the Telegraph. State intervention, however, is not the answer. It sends the message that "Britain is not open for business". When politicians try to take the "free" out of free enterprise, "they soon find that the enterprise vanishes too".

It's corporate robbery

The successful bank robber no longer leaps over the counter with a sawn-off shotgun, says George Monbiot in The Guardian. "He arrives in a chauffeur-driven car… and saunters into an office at the top of the building". Wealth, once distributed to a company's staff, or as lower prices and higher taxes, is now siphoned off by "a kleptocratic class" who have neither earned nor generated it.

If the government was serious about preventing this "great pay robbery", they would set a maximum wage, just as they set a minimum wage, adds Monbiot. But they know who their masters are, and the "feeble" policies announced are intended to create "only a semblance of action". ·